Abstract
Using data from the Survey for Income and Program Participation (SIPP), this study investigates the relationship between withdrawals from 401(k) and IRA accounts and household-level economic shocks such as job loss, job change, divorce, and the onset of poor health. Workers in low-wage households are more likely to withdraw from their accounts than those in middle and high-income households, in part because they are more likely to withdraw when they experience a shock and also experience more shocks. Shocks are associated with about 20% of all retirement account withdrawals and exacerbate pre-existing inequalities in financial preparation for retirement.
TOPICS: Retirement, legal/regulatory/public policy
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